The White House has released its fiscal year (FY) 2019 budget proposal just as Congress secured a two-year budget deal that will begin the process of wrapping up the rest of FY 2018 and set the government’s top line spending for FY 2019 as well. Included in both of these plans are funding levels for government agencies that are crucial to the basic research underpinning many of the building blocks for future innovation in the semiconductor industry. Funding for the National Science Foundation (NSF) and the National Institutes for Standards and Technology (NIST) are two of the biggest drivers for basic research in the U.S. government, with many other smaller agencies playing a role as well.

In a bipartisan compromise, Congressional leaders agreed to a deal that would lift their self-imposed spending caps for FY 2018 and pump an additional $68 billion into non-defense discretionary spending for FY 2019. They now have until March 23 to approve a detailed spending plan for the rest of this fiscal year before moving on to complete the FY 2019 plan by the end of September. While the final spending levels for individual agencies have yet to be finalized for FY 2018, the additional funding bodes well for both NSF and NIST, which had seen cuts of between 2 percent and 9 percent in earlier drafts of spending bills.

While it is the responsibility of the president to submit his budget for the funding of the federal government, the power of the purse resides with Congress.

Meanwhile, the president’s FY 2019 budget plans to flat fund NSF for the next year, while making cuts to NIST of over 30 percent. Included in these cost reductions are proposals to eliminate the popular Hollings Manufacturing Extension Partnership, which provides assistance to small and medium-size manufacturers throughout the U.S. With the program providing funds to states with up to a 50 percent match, its elimination will face strong opposition from both parties in Congress. The president’s budget cuts also target the popular Advanced Research Projects Agency for Energy (ARPA-E) for elimination. Disbanding the agency would end multiple streams of funding for innovations in energy production and storage.

While it is the responsibility of the president to submit his budget for the funding of the federal government, the power of the purse resides with Congress. The process of federal funding has been drawn out more than usual this year, with a short-term government shutdown even playing a small role. With the budget agreement now in place, the rest of the funding for FY 2018 should come by the upcoming deadline, with hopes that Congress can then quickly pivot to FY 2019. With the midterm elections coming in November, however, political implications will play an outsized roll in the process for the remainder of the year.

SEMI strongly advocates for the position that funding of basic research is closely linked with our nation’s economic prosperity in the modern global economy. Effective research funding as a national priority should be bipartisan and must be backed up by a strong and united community of stakeholders and advocates in the business, research, and education communities. In addition, this funding must not only be robust but consistent and not subjected to the uncertainty of short-term stop gap budget measures. If you’d like to learn more about SEMI’s public policy program, please contact Jamie Girard at jgirard@semi.org.